TREASURY CHIEF: HIKE USER FEES

WASHINGTON -- In the face of President Reagan's refusal to consider tax increases, a top administration official said on Sunday that the budget gap could be closed by increasing fees for users of federal services and by selling government assets.

Appearing on the CBS News program Face the Nation, Treasury Secretary James A. Baker suggested that Reagan would have no objection to raising government revenue in other ways.

Under legislation passed by Congress last week, the president and Congress must agree on a 1988 budget with a deficit of no more than $144 billion or face the automatic imposition of $23 billion in spending cuts, half in the military budget.

Reagan reluctantly agreed on Saturday to sign the legislation, which also raises the government debt ceiling to avert a federal default. He said, however, that he would veto any tax increases aimed at meeting the deficit target.

Baker and Rep. William H. Gray, D-Pa., the Budget Committee chairman, ruled out increases in individual income tax rates but predicted that Congress and the administration could agree on other new sources of federal revenue.

"You can call it anything you want," Gray said of Baker's proposals to increase revenue to help meet the deficit targets. "I mean, you can call it revenues, you can call it user fees. A duck is a duck, a tax is a tax."

Reagan's decision on the deficit bill also gave the United States new leverage on Sunday to press European nations for greater expansion of their economies to help recude America's trade deficit.

Baker didn't waste any time using that leverage, mentioning the issue of slow European growth to his counterparts at an International Monetary Fund policy meeting in Washington.

"Slow growth in Europe is a matter of concern, particularly in the largest countries," Baker said. "It will be difficult to sustain strong, export-led growth in the developing world if Europe does not participate in the process of strengthening growth now under way in other countries."

Baker didn't say it, but greater European growth also would help the U.S. trade deficit.